Govt kicks Telstra out of NBN tender

Govt kicks Telstra out of NBN tender

Summary: The Federal Government has kicked Telstra out of the competition to build the National Broadband Network, citing a technicality of the bidding process.

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update The Federal Government has kicked Telstra out of the competition to build the National Broadband Network, citing a technicality of the bidding process.

Donald McGauchie
(Credit: Telstra)

"Telstra has been informed that the Commonwealth has excluded it from the National Broadband Network requests for proposals process," the telco said in a statement this morning.

Telstra had submitted what many considered to be a very brief non-conforming bid on 26 November when responses were due, although Communications Minister Stephen Conroy at the time said that the telco's response would be considered.

Telstra chairman Donald McGauchie said the government's reasoning was that Telstra's bid did not include a plan for how to involve small to medium enterprises in the building of the NBN, a claim McGauchie said was fiction, as Telstra provided its SME plan in early December.

"The Commonwealth could hardly have dreamed up a more trivial reason to exclude Telstra from the NBN," the chairman said.

The telco was notified last night of its exclusion, according to chief executive Sol Trujillo, speaking at a briefing called at short notice this morning.

"Clearly we are a bit surprised at taking this action on a triviality," he said. "We were very clear in our minds that we were fully compliant."

Telstra's group general counsel Will Irving said that pushing Telstra out of the process was clearly a choice for the government and not a move based on the conditions of the RFP.

Telstra CEO Sol Trujillo
(Credit: Telstra)

"The government has the power under the existing process, if it wanted to have Telstra in the process, to keep Telstra in the process," he said. "Even if you take their view of the way they say the RFP has been worded, they could still have chosen to have us there if they'd wanted to. For that reason we assume that they do not wish to have us there."

Irving said that Telstra was out of the expert panel process, but after that was completed it would be up to the government if it wanted to talk to Telstra about the NBN.

Trujillo seemed to believe there was still the chance Telstra would get a look-in. "The RFP process leads only to the minister getting a recommendation. It is open for the government to re-engage with Telstra if and when it wishes," he said. "The minister can talk to whoever he wants to talk to after the panel reports to the minister. He can decide to take to cabinet whatever proposal he chooses. The cabinet will then make a decision."

The company had not decided on whether to take legal action or not. "We reserve our rights on future action. It is too early to rule anything in or out and we remain hopeful that sense will prevail outside the RFP process at a later date," Trujillo said.

Even if the move spelled curtains for Telstra's NBN bid, the telco had other options, Trujillo said, pointing to the possibility of extending the company's HFC cable network and increasing speeds of its Next G mobile network. Besides, Trujillo said, the company would have plenty of time.

"Even after decisions and legislation, there is a lot of time left to run before anyone else starts building. In which case any real impact on Telstra, even assuming we don't respond, and of course we will respond competitively, is years away," he said.

Telstra would beat the other bidders to the punch, Trujillo said. "We know that we can move faster, we can move bigger." His last words were: "Nothing stops Telstra".

Topics: NBN, Broadband, Government AU, Telcos, Telstra

Suzanne Tindal

About Suzanne Tindal

Suzanne Tindal cut her teeth at ZDNet.com.au as the site's telecommunications reporter, a role that saw her break some of the biggest stories associated with the National Broadband Network process. She then turned her attention to all matters in government and corporate ICT circles. Now she's taking on the whole gamut as news editor for the site.

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Talkback

106 comments
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  • JUSTICE AT LAST!

    If you do things by halves you deserve to get the boot. This is justice for every Internet user in Australia.

    Thankyou Senator Conroy. I don't vote Labor but this is definitely the best Christmas present any government could give.

    This is Telstra's just desserts for their arrogance and lack of foresight.
    anonymous
  • Appropriate Action

    Congratulations to the Government and the panel deciding on the 'eventual' succesfull bidder.

    Telstra got exactly what it deserves. The have treated the government and the people of Australia with utter contempt and this is the right call.

    As any business would know, when submitting a response to a tender, you must show that at the very least you have answered the questions proposed to you. I would think Telstra did note ven come close to answering any questions in their poor excuse for a response.

    Telstra does not deserve to be a part of the process and this is the best result possible. There are other bids that have been submitted that show that organisations other than telstra have the capacity to build a fair, highly accessible and soundly priced NBN.

    Well done to all involved...abrave decision...but the right one....!
    anonymous
  • Telstra

    If they couldnt even put in a proper bid, how on earth did they expect to run the project.
    What a bunch of incompetent clowns. Unbelievable!
    anonymous
  • NBN

    I would imagine this will mean if anyone else tries to build the network It will be tied up in the courts for many year to come. So much for having an NBN being built anytime soon.
    anonymous
  • pffft

    a national filtered broadband network? stick it where the sun dont shine
    anonymous
  • tied up in courts

    I'm not so sure about that Cabel - I mean yes they're entitled to take it to court I guess, but I think whoever builds the nbn will make Telstra an offer that only a crazy person would refuse.
    anonymous
  • Silly Decission

    There is no other way to have a National Broadband Network than with Telstra. They are hated, true, but every major Telco in the world is. The problem Australia has is the second Telco is much much worst. Their 3G network doesn't even work in Chatswood!!!. Telstra invested 1.2 billion on their networks (fixed and wireless) Optus invested around 300 mil only!. Telstra is expensive because they made the investment and the network WORKS! It may hurt us, we may not like it, but that is reality, there is no other Telco that can build this for Australia.
    anonymous
  • Typical, half-assed

    @mike: I agree - it's very typical of Telstra to do something half-assed, then patch it up later.

    The response to the tender just proves that they are not committed to getting the job done properly in the first place.
    Dymos
  • Fabulous news

    Great news that the arrogant clowns have been given their comeuppance. Won't mean anything in the long run but, nonetheless, it has made my morning...
    anonymous
  • We Still Need Them

    Whether we love or hate Telstra, the fact is they still need to be part of this bid process.

    If theyre excluded be prepared for a long drawn out process where they will not only run it through the courts but will delay at every step of the way when its time for the rollout as i guarantee that all of the bidders will use some of Telstra's last mile.

    They wont all be building fibre to the home to every household in Australia - its just not realistic. And we all know how great wireless is!
    anonymous
  • Now for the real building

    If I was Sol right now I would start spending the $5B that has been put aside for the NBN on my own projects; by the time the tender process is completed I would have a 12-18 month lead over my nearest rival. The ACCC would also have no reason to declare these new services resulting in Telstra having a Next G type of lead (greater speed & coverage) over it's rivals for years to come.
    anonymous
  • What goes around comes around!

    (Letter to Telstra)

    Dear Chairman,

    Now you know what it it like to not have coverage outside of the big cities for a rip off price. Wow, you have lost the monopoly right when every form of communication is moving online. Home phone... NO, VOIP! Mobile...NO! Skype!

    Sound like theweb is the network you would want to be building??

    Will
    anonymous
  • ???

    What are you talking about? No coverage with Telstra in the bush? You must be using Optus or Voda!!.....
    anonymous
  • They had no choice

    It was a non-conforming bid and if accepted, all the others could have sued.
    anonymous
  • Glad to see some real competition coming

    This decision paves the way for something this country has needed for a very long time - true competition, which can only be delivered via competing networks rather than over-regulation of one single network.

    This has been something that is long overdue and in a few short years Telstra will no longer be able to whinge due to being forced to provide wholesale access to their network. There will be a new competing network who's owners will willingly provide such access.

    All I can hope is that the winner will pay LOTS of attention to bandwidth and speed. This country needs to face upto a responsibility by ensuring that speeds available overseas are also available here.
    anonymous
  • Fair compensation provided

    It has been reported here and on other sites before that Telstra will be fairly compensated where the last mile is disconnected from the copper network and attached to the fibre network via the new nodes.

    It would also be feasible for Telstra to go ahead and roll out its proposed fibre network despite not winning the bid and then compete with the winner. The only difference will be that Telstra won't receive a subsidy for their effort. With the prices they planned on charging they wouldn't need the subsidy anyway.
    anonymous
  • Justice at last

    As far as Christmas presents go, all I can say is that you are very easily pleased.
    anonymous
  • Appropriate Action

    If you don't think Telstra knew what they were doing, and got what they deserved, you are a naive knucklehead, that simply hates Telstra.
    anonymous
  • Real competition?

    If it is not Telstra, I don't know who else could build this network. Other Telcos don't have the level of investment that Telstra has Real competition? I don't think so really....
    anonymous
  • Telstra

    Those "incompetent clowns" have been giving Telstra shareholders, what are among the very best share dividends on the market, for the past few years. You obviously are not one of them, and thats why you get your kicks simply by bagging them ! Get a life mate !
    anonymous